Iran says Saudi will suffer more from oil price slide

TEHRAN: President Hassan Rouhani said Tuesday that Iran would withstand the economic pain of plummeting oil prices, with Saudi Arabia and Kuwait likely to suffer more from the slump.

Iran has been among the oil exporting countries worst hit by the sliding price of crude, given its current budget was based on sales at $100 per barrel.

In a draft plan for the next financial year starting March 21, Rouhani’s government cut the projected sale price to $72 but oil has continued to dive toward a six-year low, raising the prospect of a ballooning deficit in Tehran.

Brent crude for February delivery tumbled to $46.40 per barrel on Tuesday — the lowest since March 2009.

And with US benchmark West Texas Intermediate (WTI) for the same month at $44.20 a barrel, prices are 60 percent down from June 2014.

Rouhani, stating that oil was projected to account for only one third of Tehran’s revenues in the next budget, said Saudi Arabia and fellow Gulf state Kuwait “will be harmed more than Iran”.

“Saudi Arabia’s budget reliance on oil sales is 80 percent and 90 percent of its annual exports are related to oil. Kuwait’s budget is 95 percent reliant on oil,” he told a crowd in the southern port city of Bushehr in a speech shown live on state television.

Falling prices have been attributed to rising production of US shale oil and lower than expected demand from Europe and Asia, leaving income for major producers including Iran, Venezuela and Russia sharply down.

The pace of the slide accelerated in November when the Organisation of Petroleum Exporting Countries decided to maintain production at 30 million barrels per day.

Rouhani’s comments follow similar remarks from Iranian officials who have criticised OPEC heavyweight Saudi Arabia — which has built up hundreds of billions of dollars in reserves from high prices in recent years — for failing to take steps to raise prices.

Rouhani, elected in June 2013 on a pledge to revive Iran’s sanctions-battered economy, has lifted Tehran out of recession and in recent months stressed the need to increase non-oil exports.

– ‘Unity and resistance’ –

But on Tuesday he denounced sliding crude prices as “a plot that will be overcome with unity and resistance”.

“Those who have planned the oil price reduction against some countries should know that they will regret it,” he said, without elaborating.

Iran’s inflation rate has halved to less than 20 percent under Rouhani but with prices still rising people continue to be hit in the pocket.

Businesses are also largely cut off from liquidity in the international banking system, because of international sanctions linked to Iran’s controversial nuclear programme.

By seeking a nuclear deal with world powers, Rouhani aims to open Iran up to foreign companies under partnership deals.

In Bushehr, he implicitly warned US lawmakers against adopting any new sanctions, saying they would fail as his country was beginning to exit the sanctions-era.

His comments came after Republicans in the US Congress said they were preparing further sanctions against the Islamic republic to force concessions, a move opposed by the White House. -AFP